Accounting Principles and Procedures

Question 1

What is the difference between a Balance Sheet and a Profit and Loss Account?

Answer 1

A Balance Sheet is a ‘statement of financial position’. Shows assets & liabilities at a given date.

A Profit and Loss account is an ‘Income Statement’ shows a business income and expenditure.

Question 2

What are management accounts used for?

Answer 2

Internal use, is not audited

Question 3

What is a cash flow statement? What does is show?

Answer 3

Shows receipts and expenditure inclusive of VAT

Question 4

What is IFRS 16?

Answer 4

International Financial Reporting Standards 16

Question 5

What does IFRS 16 relate to?

Answer 5

Lease Accounting

Question 6

What effect does IFRS 16 have?

Answer 6

Means that the full cost of a lease must be accounted for on balance sheets.

Occupiers rent has to be recognised as a liability.

Question 7

What are Dun and Bradstreet Reports?

Answer 7

A tool to assess the financial health and risk profile of a business.

Question 8

How do you use a Dun and Bradstreet Report?

Answer 8

• Search Business name
• D-U-N-S® Number (unique ID) needed
• Address and contact info

Question 9

How many parts are there is Dun & Bradsheet reports?

What does each part cover?

Answer 9

2

1. Shows the Net Tangible Worth of the Business
2. Shows the Risk of Default of the Business
   They are measured on different scales

Question 10

What’s included in a Dun & Bradsheet report?

Answer 10

A business is rated 1-5 for its risk of instability. 1 is the lowest

A measure of payment behaviour rated 1-100. 80+ means on time payments